Taking your beginner steps into crypto can sometimes feel overwhelming, and knowing where and how to store your crypto correctly is highly important.
This is a popular topic, as more and more traders and investors are concerned about the consequences of their crypto wallet selection. So if you’re just starting out, you’re in the right place!
This article will provide a detailed overview of the different types of crypto wallets, their use cases, which one is right for you and how to get one. However, before we get into “how to get a crypto wallet?” It is essential to understand what a crypto wallet is and why you need one.
What is a Cryptocurrency Wallet?
In Satoshi Nakamoto’s white paper for Bitcoin (BTC), he/she/they states that a Bitcoin wallet is “loosely the equivalent of a physical wallet”.
The primary difference is that your crypto wallet doesn’t actually hold any funds; the crypto stays on the blockchain, and your wallet itself functions to give you (and you alone) access to your funds.
Each wallet is identified by its own unique wallet address, which is usually a lengthy combination of random letters and numbers. Think of the wallet address just like a standard address. Multiple people can know the address; however, only you have the keys to access what is inside.
Why Not Just Keep Your Crypto on Binance?
Wallets are essential for you to store and transact crypto as they interact directly with the blockchain.
When you buy cryptocurrency through a centralised cryptocurrency exchange (e.g. Binance/Coinbase), you use the wallet provided by the platform. This is known as a custodial wallet as you do not own the keys; you just have access to the custodian’s database, and more importantly, the crypto exchange also has access to your funds.
A famous saying of the crypto folk goes, ‘not your keys, not your coins!’.
If being in complete control of your crypto is important to you (which it should be!), you are better off looking for a non-custodial wallet, which means that you are the one who holds the keys and only you can access and manage the crypto in that wallet.
What Are The Different Types of Wallets?
Open-source crypto wallets are often categorised as ‘hot’ or ‘cold’. Hot wallets are defined by being constantly connected to and used directly with the internet. In contrast, cold wallets come in physical form and are not directly connected to the internet.
With that in mind, cold wallets generally offer a higher level of security and are predominantly used for storing more significant amounts of crypto. However, for what you gain in security, you lose in flexibility. Hot wallets offer a much more seamless functionality.
Hot Wallets (Software Wallets)
Web Wallet – Web wallets are one of the most common types of hot wallet. They operate as an extension on your browser, which removes the need to download any software on your computer. This gives them the highest level of convenience when interacting with websites or DEX’s online.
Desktop wallet – A desktop wallet is an application only accessible from the computer it was downloaded on. Whilst they offer security, they are still hot wallets, so there is some risk still involved.
Mobile Wallet – With comparable functionality to a desktop wallet, mobile wallets are downloaded as a mobile app and used as a hot wallet on your phone. A common feature of mobile wallets is scannable QR codes, making paying in and receiving crypto much easier.
Hardware Wallet – The fundamental difference that hardware wallets have is that your private keys are stored on a physical device rather than in an application or software (cold storage). The obvious advantage is that your keys always avoid any online exposure and your digital assets are safe from any hacker attacks. We recommend mycelium wallet.
Which Wallet Is Right For Me?
Deciding which crypto wallet you need should be based on which one fits your crypto habits the best. Other things to take into consideration are:
- How much crypto assets you hold – If you plan on only investing a small amount, then it may be worth sticking to a mobile, desktop or web wallet as the cost of popular hardware wallets such as Ledger nano x or Trezor range between $100 and $150.
- How often you plan on trading – Generally speaking, hot wallets are quicker and easier to access, so if you’re frequently logging on to trade, using a hot wallet would make the process smoother. You can still trade through cold wallets, although they are typically used for secure storage and less frequent trading.
- Peace of mind – If your investment strategy is more long-term and you’re more drawn towards buying and holding your crypto, a hardware wallet would be highly recommended. If you’re not moving or trading digital currency frequently, you want to optimise for security.
It’s worth noting that many crypto users often adopt a combination of hot and cold wallets to benefit from each of their perks. If this is something you can see yourself doing, portfolio trackers are a great tool to keep on top of all your wallets and funds. We have a guide to the best ones here.
How To Get a Crypto Wallet
There are three types of digital wallets- Web, Desktop and Mobile Wallets:
Web Wallets – MetaMask is the most popular and trusted choice, using Ethereum as its default network. It also supports several other networks such as Binance Smart Chain, Polygon, Fantom and Avalanche, to name a few.
- How to get one – Download MetaMask here as an extension to your browser. Alternatively, other network web wallets are also downloadable straight from their site. When installing any wallet, double-check it is from the official website!
Desktop Wallets – Like web wallets, desktop wallets are downloaded straight from the provider’s website. The same risks apply, so be sure to double-check everything!
- How to get one – Direct download from the providers website.
Mobile Wallets – There are many options for mobile wallets; some are made for specific networks and tokens. For example, Blue wallet is designed specifically for Bitcoin and the lightning network. When downloading a mobile wallet, check that the app has a substantial amount of reviews; this can help identify potential scam apps, as well as whether they are compatible with your mobile device (Android or IOS).
- How to get one – Download directly from the app store.
Hardware Wallets – It’s advised to buy hardware wallets directly from the manufacturer’s website to avoid mishaps. Do not purchase any second-hand wallets! Your secret key phrase may have been compromised. The most trusted and reviewed hardware wallets are Ledger and Trezor.
- How to get one – Order directly from the manufacturer’s website.
On a final note, some important things to note
The variants between each wallet type provide users with advantages, disadvantages and a varied level of security. When it comes to choosing any wallet, be sure to do your own research into the risks related to each wallet type, its security features, transaction fees, recovery phase if lost and the reliability of the provider. And remember, regardless of the wallet type, always remember to store your recovery phrase (seed phrase) safely and never share it with anyone!
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